NPM 003-2013

Issues Concern: Computation for Cumulative Amount of Positive Variation Order

Details

Clarification on the computation for the cumulative amount of variation order involving positive (additive) and negative (deductive) variation orders.

In computing for the cumulative amount of positive (additive) variation order, we use the following formula:

Cumulative Amount of Positive Variation Order (CAPVO)

=

Total Positive Variation Order (TPVO) + Total Negative Variation Order (TPVO)

x 100%

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Original Contract Price (OCP)

The positive (additive) variation order represents the amount of Extra Work Order or Change Order resulting in an increase in the cost of the contract while negative (deductive) variation order represents the amount of Change Order resulting in a decrease in the cost of the contract. As such, the amount of the negative (deductive) variation order maintains its nature as a negative value, and should be subtracted to the amount of the positive (additive) variation order, which has a positive value. Simply put, the mathematical formula is expressed as follows: